Ethan Allen to Show Flat 1Q Sales

October 21, 2015  by in Financial Reports, Industry   

The company issued comments on its performance this week in advance of scheduled debt financing meetings.

Based on preliminary numbers, the company expects sales for the fiscal first quarter to remain steady with the same quarter last year.

"We are pleased that our balance sheet remains healthy and that we have continued to strengthen our financial structure,” said Farooq Kathwari, chairman, president and CEO. “We ended the first quarter with about $95 million of cash and securities and no net debt. We are well-positioned to execute our planned offering of $250 million in debt and expect to begin that process in the near-term. We plan to use proceeds from the offering to return capital to shareholders through dividends, share repurchases or a combination thereof, and for general corporate purposes.”

The company said written sales for the quarter were down 9.3 percent and same-store, written sales were down 9.8 percent from the prior year period. Ethan Allen attributed the declines to the timing of the company's marketing strategy. The timing of the of the annual price increase resulted in shifting some written sales into the quarter ending June 30. In addition, as part of the initiative to make major new product introductions more effective, both at the retail and at the manufacturing levels, a storewide introductory sale event began Sept. 1 and will conclude on Dec. 31 as compared against monthly end-of-sale promotions in the prior year period, affecting the month of September. Ethan Allen expects stronger written sales in the second quarter fiscal 2016 and moving forward. The company also said October is tracking with increased trends of written sales.

"We are in the midst of a substantial transformation that is leveraging our unique, vertically integrated structure, while repositioning Ethan Allen's offerings, interior design network, manufacturing and logistics,” Kathwari said. “We believe these initiatives are positioning the company for long-term growth and success, and we expect to complete our transformation in 2016.”

The company will release its complete first quarter financials after the market closes Tuesday, Oct. 27.